Skift Travel News Blog

Short stories and posts about the daily news happenings around the travel industry.

Airlines

Avianca Calls Colombia’s Conditions to Viva Air Merger ‘Unfeasible’

1 year ago

Whether Viva Air will ever fly again is increasingly an open question. Avianca, which wants to merge with the bankrupt budget carrier, said late Wednesday that the conditions laid out by Colombian civil aviation regulators for the deal “make Viva’s recovery impossible.”

“Several conditions that, depending on the case, (i) make Viva’s operation unviable in the medium term, sentencing it to operational and financial failure (e.g. lack of slots), (ii) are impossible to comply with, given the current reality of that company, which has already lost more than half of its aircraft (e.g. the requirement to maintain capacity on exclusive routes despite the lack of aircraft and slots), or (iii) grant unjustified benefits to third parties (e.g. requiring Avianca to pay for Satena’s IOSA certification).”

— Avianca in its response to regulator Aerocivil’s tentative approval of the merger

The Bogotá-based Star Alliance carrier added that the conditions were “unfeasible” for the deal to move forward.

An Avianca aircraft taxis in Guatemala City
(Rene Hernandez/Flickr)

Aerocivil’s conditions include divesting slots at Bogotá’s congested El Dorado airport, reviving the Viva Air brand, honoring the tickets of travelers affected by Viva’s shutdown, and maintaining a codeshare with Colombian regional airline Satena.

Avianca first acquired Viva in mid-2022, and then announced plans to merge with the Colombian discounter — but maintain it as a separate brand — last August. What’s followed is a telenovela of twists and turns including allegations of antitrust violations by Avianca, 11th hour interference from competitors, and mixed messages from Aerocivil.

What happens next is anyone’s guess. Viva closed its doors two months ago at the end of February and, as Avianca, points out, aircraft leasing companies have already begun taking back aircraft. Latam Airlines has begun offering former Viva staff jobs at its own growing Colombian subsidiary. And competitors, including Chilean discounter JetSmart and Copa Airlines-owned Wingo, have outlined plans to expand in the domestic Colombian market.

Aerocivil has said that Avianca, and other “interested parties” — including JetSmart, Latam, and Wingo — have 13 days to respond to its tentative approval. Only then, under the current timeline, could it finalize its approval and the deal close.

Airlines

Avianca Partially Accepts Colombia’s Conditions to Viva Air Merger

1 year ago

The potential merger of Avianca and Viva Air took a small step forward Wednesday when the former partially accepted the conditions laid out by the Colombian government for the combination of the country’s largest and third largest airlines.

While Avianca accepted regulator Aerocivil’s passenger protection provisions, including guaranteeing refunds for all travelers affected by Viva’s closure, it asked for “clarifications and minor modifications” to other conditions. The Star Alliance carrier asked that the remaining provisions, which include giving up slots at Bogotá’s congested El Dorado airport and committing to operating certain routes, reflect the “reality of the current market and to the operating conditions currently available to Viva.”

The latter point referred to Viva’s shutdown in February and subsequent repossession of several of its planes aircraft leasing companies. Then in March, budget competitor Ultra Air also shutdown, which upped pressure on the government to bring some budget airline capacity back to the Colombian domestic market, which had fully recovered to 2019 traveler numbers by October.

Avianca and Viva have called for “quick solutions” from Aerocivil in its response.

A Viva Air Airbus A320neo
A Viva Air plane. (Viva Air)

Competitors JetSmart and Latam Airlines, however, have appealed Aerocivil’s tentative approval of the merger. Both have previously expressed interest in acquiring the assets of Viva, which would give JetSmart its first domestic operation in Colombia and Latam a larger presence.

Latam, Avianca’s main competitor in South America, said Tuesday that it is seeking additional slots at the Bogotá airport from the merger. It added that, since Viva and Ultra shutdown, it has added five aircraft to its Colombian operation and increased the number of seats by 20 percent. Latam is backed by Delta Air Lines and Qatar Airways.

JetSmart, for its part, received a local operating certificate in March to begin domestic flights in Colombia. The Chilean discounter’s owners include U.S. private equity firm Indigo Partners and American Airlines.

The responses this week are the latest in what has turned into something of a soap opera over the future of the Colombian aviation market, which is the third largest in Latin America. Avianca, in the course of its takeover, may have violated local antitrust law after it took economic control of Viva last year and then, reportedly, installed a board to oversee the business that had its interests in mind. The airlines first sought approval to merge in August, a request that Aerocivil denied in November, and then reopened in January.

The Avianca-Viva merger is separate from Avianca’s plan to merge with Brazil’s Gol to create the new Abra Group.

Airlines

Colombia to Take New Look at Avianca-Viva Air Merger

1 year ago

Colombia’s civil aviation authority, Aerocivil, is taking a new look at the proposed merger of Avianca and Viva Air following what it described as a “substantial irregularity” in its initial review. That process, which concluded in November, rejected the airlines’ combination due to competition concerns.

Aerocivil notified the airlines Thursday that it would “proceed quickly” to review the proposed deal again. The regulator did not say whether the process would take into account the concessions, including a commitment to keep the Viva brand and giving up slots at Bogotá’s congested El Dorado airport, that Avianca and Viva offered in November.

A Viva Air Airbus A320neo
(Viva Air)

“Staying independent in aviation in the 2020s is not an option,” Viva CEO Felix Antelo said on the importance of the merger in an October interview. “It was hard pre-pandemic. It’s not an option now.”

Avianca and Viva would together operate a 61 percent share of seats in the Colombian market based on 2022 numbers, according to Diio by Cirium schedules. The next largest carrier, Latam Airlines, had a 24 percent share of seats.

The proposed merger is a precursor to a much bigger deal: the combination of Avianca and Brazil’s Gol under the new Abra Group banner. The two airlines plan to maintain separate operations but say the deal would allow them to realize other operational and backoffice synergies, for example placing joint aircraft orders. Abra would be akin to an Air France-KLM or International Airlines Group of South America, and challenge to regional market leader Latam.

Airlines

Colombia Blocks Avianca and Viva Air Merger

2 years ago

The Avianca and Viva Air merger has hit a major roadblock with Colombian authorities objecting to the proposed combination. The move could be a blow to Avianca’s plan to create a pan-South American airline group with Brazil’s Gol.

Colombia’s Civil Aeronautics Authority, or Aerocivil, said Tuesday that the merger of the country’s first and third largest airlines could reduce competition and hurt consumers. It could also increase the barriers faced by competitors in the market. In addition, Aerocivil said the financial situation at Viva Air, which the airline’s claimed required expedited approval of the merger, was not so bad as to “affect its viability in the market.”

An Avianca aircraft in Miami. (ERIC SALARD/Flickr)

“We are concerned about the direction of the decision, as it … ignores the potential effect that the disappearance of Viva would have on users and the market,” Avianca CEO Adrian Neuhauser said in a statement on the decision. “At Avianca, we reiterate our willingness to actively participate in rescuing Viva.”

Avianca first announced plans to acquire Viva Air, but not merge with it, in April. However, in August the airlines requested expedited antitrust approval from Aerocivil for a merger that was “vital for the sustainability and development” of Viva Air. In an October interview, Viva Air CEO Felix Antelo said the airlines planned to continue operate as separate brands but would coordinate schedules and fares in order to offer travelers better flight options.

“It will provide for us a financial muscle way stronger and better than what we had before,” he said. “We are going to keep the [low-cost] model around, we’re going to keep the brand around, [and] we’re going to keep the low fares around.”

Antelo also said that “staying independent in aviation in the 2020s is not an option.”

The Avianca-Viva Air merger is the first step in the creation of Abra, a new South American airline holding company created by the merger of Avianca and Gol. The group also has the option to take at least a 42 percent stake in Chile’s Sky Airline.

Aerocivil said it would reconsider the deal if Avianca and Viva resubmit their merger application and offer “remedies” to boost competition.

Updated with comment from Avianca CEO Adrian Neuhauser

Tourism

Colombia and Peru Only Two Countries Increasing Share of U.S. Inbound Travelers in 2021

2 years ago

This chart below from the United States National Travel and Tourism Office came out this week, and two countries are standout in an otherwise dismal-but-improving 2021 inbound travel market. Colombia is emerging as a force to be reckoned with, as we wrote in detail last month.

CountryArrivalsShareChange from 2020Change from 2019Change in 2021 Rank
Total22,100,453100.00%15.00%-72.20%From 2019
1Mexico10,396,72447.00%52.70%-43.30%↑+1
2Canada2,529,02211.40%-47.40%-87.80%↓ -1
3Colombia1,063,6594.80%293.80%12.70%↑ +10
4United Kingdom460,7492.10%-36.90%-90.40%↓ -1
5India433,3052.00%29.00%-70.60%↑ +5
6Ecuador407,4171.80%140.60%-10.80%↑ +15
7Dominican Republic405,8691.80%127.10%-16.90%↑ +12
8Peru404,9371.80%340.50%22%↑ +20
9Argentina301,7941.40%52.60%-64.70%↑ +6
10Guatemala279,8961.30%249.50%-0.80%↑ +24

Source: U.S. Department of Commerce/ITA/I&A/National Travel and Tourism Office (NTTO)/ADIS/I-94 Program

And the numbers bear that: visitors from Colombia to U.S. were up almost 13 percent from pre-covid 2019 and crossed the one million mark, a huge feat in itself. Peru was the other country, with 22 percent more visitors in 2021 compared to 2019. Shows the growing power of LatAm countries and will make up for some lost tourism business from the likes of increasingly isolationist China, for instance.

View Full Numbers

Tags: colombia, peru